Artificial intelligence and its impact on economic development: A comprehensive review

Based on academic research, consulting material and institutional publications, the present study reviews the available literature related to anticipated economic effects of AI development. Artificial intelligence (AI), through the use of data analysis to drive better decision making, is another critical enabler for increasing productivity and stimulating economic growth. But it also comes with major issues such as labour market polarisation, growing inequality, structural unemployment and the compounding of new industrial forms. The research demonstrates how AI fuels growth, but it also allegedly carries with it serious problems such as polarization of the labor market, growing inequality, structural unemployment and advent of new industrial patterns. This study shows that AI enables growth by substituting scarce labor with virtually unlimited capital in the production of goods, services, and innovation, and it employs the Cobb-Douglas production model that stresses labor and capital. This document provides a descriptive framework for understanding how AI plays into economic dynamics, the evolution of job movements, and technical developments.